Lactalis purchase of Siggi's could strengthen its yogurt dominance

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Dive Brief:

French dairy company Lactalis will acquire Siggi's, the New York-based maker of Icelandic-style yogurts, for an undisclosed price, according to a company release.

Siggi's is a top-five selling brand found in retailers such as Stop & Shop, Meijer and Publix. In December 2017, it became the top-selling yogurt brand in Whole Foods, according to Nielsen. The company projects similar growth this year as it brings new innovations to the market.

Siggi's will remain an independent company based out of New York, with founder Siggi Hilmarsson maintaining his role as chief executive.

Dive Insight:

In a storybook tale of American entrepreneurial success, Siggi Hilmarsson, dissatisfied with options at New York grocery stores, started making his own yogurt with a recipe from his native Iceland. Giving the brand his name, Hilmarsson began selling it at an outdoor market in Manhattan and later found his way into the yogurt aisle of some of the country's top grocery chains. Twelve years after the product's debut at the Manhattan market, his brand is taking a key step in its evolution. The purchase by Lactalis, the world's largest dairy firm, will bring the company industry knowledge, scalability and greater opportunities for R&D.

Siggi's has already achieved widespread popularity on its own, benefiting from the modern American consumer's demand for authentic, "clean" yogurt offerings with reduced sugar. The company's product, sold in eye-catching white packaging and made from milk from grass-fed cows, real fruit and zero artificial sugars and preservatives, ticks each of those boxes. Time will tell how a strong parent company will help boost its expansion and distribution opportunities. Corporate America is littered with trendy upstarts that have struggled after being taken over by a larger company.

The sale of Siggi's​ comes six months after Lactalis purchased Stonyfield yogurt for $875 million, and may signal an effort by the company to gain market share in the category, one of the fastest growing food segments among U.S. shoppers. The North American yogurt market was valued at $11.18 billion in 2015 and is projected to reach $14.59 billion by 2024, according to Transparency Market Research.

Leadership in the U.S. yogurt market is up for grabs, as sales of General Mills’ Yoplait have declined while Chobani and other upstarts surge in popularity. Consumers are increasingly choosing more innovative formulas with a high protein content, reduced sugar and a thicker consistency.

For now, Siggii's and Lactalis would be wise to invest in new product varieties and take advantage of consumer love for skyr — because there's no telling when another yogurt brand will steal the spotlight.